How To Take Risks While Managing Risk In Business

Risk management is essential to the success of every business. Without effective risk management, your company could face numerous problems that will hamper growth and eat into profitability. The worst case scenario is an issue that could put you out of business, so risk management is obviously very important.

Having said that, managing business risk doesn’t mean you should never take any risks when doing business. It’s going to be hard to move forward or stay competitive if you always play it safe. It’s really a matter of weighing up the risk versus reward ratio.

Let’s look at some ways you can take calculated risks in your business while at the same time maintaining a risk management plan.

Use Your Risk Management Analysis To Make Better Business Decisions

When you first created a risk management plan, you would have compiled a list of potential risks and problems your business could face. An effective risk management plan would have also seen you prioritise those risks and determine what the outcome would be if that particular risk ever materialised.

This type of information can prove to be invaluable when making business decisions. To begin with, you have data to refer to when determining how the business should move forward. You will also be aware of the possible consequences of making a decision, or making a wrong decision.

Decision making in combination with risk management can lead to a deeper and more refined risk management process. If you want to move forward with a decision but also realise potential issues that could come about due to that decision, you and your team can then formulate a way to move forward while also reducing the likelihood of those problems becoming a reality.

In the final wash up, if a particular decision simply sounds too risky to take a chance on, your risk management processes will be able to steer you in a better direction.

Create Contingency Plans Based On Perceived Risk

You can still move forward with taking some risks, so long as you are aware of what the potential fallout could be if things don’t end up going to plan. That’s the real advantage of focusing on risk management. You are aware, at all times, what the downside could be and this enables you to think ahead and make contingency plans should your risk taking not pan out. This will help to minimise the impact of the risk if it’s unsuccessful.

On the other hand, with the peace of mind and the knowledge that risk management gives you, you can take some chances to propel your business forward and it can be these risks that elevate the company to the next level when things do work in your favour.

Always Weigh Up the Pros and Cons

Before making any decision or taking any chances, it’s always a wise idea to draw up a simple list of the pros and cons first. Working out the cons will likely prove quite easy if you reference your risk management data and you will already have the positives in mind, or you wouldn’t be contemplating taking the risk in the first place.

A list of the pros and cons will enable you to weigh up the risk versus reward ratio before making a decision one way or the other. It would also be a good idea to perform a thorough SWOT analysis before making any major decisions.

Invest In Dedicated Risk Management Software

Whether you’re a business owner or employed as a risk manager, dedicated ERM for risk professionals will make managing risk so much easier. Not only does the software monitor your business and alert you to potential problem areas before an issue can arise, but the data the software provides will also enable you to evaluate risks and their potential outcomes, should you decide to move forward with a major decision, or take the business in a different direction.

Enterprise Risk Management Software will enable you to take calculated risks while maintaining the integrity of your company.

The Wrap

Risk management isn’t about playing it safe and taking no risks at all. It’s more about educating yourself on the possibilities so you can make informed decisions and counteract problems before they occur.